The great and unprecedented war expenditure from 1801 to 1815 upset all the calculations of Pitt and Castlereagh as to the amount of Irish contribution to Imperial expenditure, and rendered the financial arrangement of the Treaty of Union one which the resources of Ireland were totally inadequate to bear. The actual provisions of the financial article of the Treaty as regards the mode of adjusting the accounts between the two countries seem to have been interpreted in a favourable way by the various parliamentary committees, while in the actual settlement of the accounts there was no desire to treat Ireland otherwise than fairly. But events which British statesmen had not foreseen crushed Ireland under a weight of taxation and justified the opinions and prophecies of Grattan, Foster, and other Irishmen. Pitt acted as if he believed the French War would not last long, and consequently that the joint expenditure of the United Kingdom would decrease and the debt charges of Great Britain diminish. But as Grattan said in 1819, "The truth is, the necessary and inevitable expenses of the war were beyond all possibility of calculation and foresight, and Ireland was not able to follow you."806
We have seen that in the years immediately preceding the Union the total Irish expenditure under the independent Parliament had been greatly swollen by the cost of the French War and the Irish rebellion. It is interesting to take the fifteen years before the Union, three of which were years of war alone and four years of war and rebellion combined, and compare the total expenditure during these years with the total Irish expenditure during the fifteen years following the Union, fourteen of which were years of war. In the first period Irish expenditure was £41,000,000a small enough sum according to modern ideas if we take the circumstances of the time into account, but a huge amount in the eyes of the Irish Parliament. But in the second period we leave small figures behind us, for from 1801 to 1816 the total expenditure of Ireland amounted to £148,000,000, or more than three and a half times the sum expended during the previous fifteen years.807 Of this £148,000,000 Ireland raised in taxes £78,000,000, or £47,000,000 more than she had raised by this means during the fifteen years preceding the Union; the remainder she obtained by borrowing, so that only 49 per cent of the whole Irish expenditure was met by taxation, whereas during the same period Great Britain raised by taxation 71 per cent of her enormous expenditure. Thus, in spite of the greatest efforts, the total revenues, exclusive of borrowing, raised by Ireland during these years were less than half the amount of the expenditure which she was supposed to meet. It is interesting to notice that in 1815, the year when the Irish revenue reached its highest point, and when the increase of Ireland's net product from taxation was, as compared with the year 1800, no less than 128 per cent, a greater ratio of increase than Great Britain produced in any similar period, this increased revenue was only 38 per cent of the whole Irish
p.373expenditure, or less than the percentage of previous years.808
The inability of Ireland to raise a larger sum by taxation led to a huge increase in her national debt. Between the years 1801 and 1817, while the total British debt less than doubled itself, the Irish debt almost quadrupled, having grown from £32,215,223 to £112,634,773, as against an increase in the British debt from £489,127,057 to £737,422,469.809 Parliament realised that it was inexpedient from an economic point of view to raise Irish taxation even within measurable distance of British, as such an increase of taxation would diminish the yield. Indeed, there was reason to believe that the point at which the limit of Irish taxation was reached had been already overstepped, as during certain years subsequent to the Union some of the taxes had shown a decreasing yield. The taxes of 1801 produced £400,000 less than those of 1800; the year 1802 showed a deficiency, as compared with 1801, of a similar amount; and in the two years 1804 and 1811 the produce of the taxes fell short of their estimated yields by large amounts,810 and this took place although the duties on spirits, tobacco, tea, and malt had been doubled. As Irish revenue could not be increased to a sufficient extent by taxation, the only way of defraying expenses was by borrowing. Loans could be raised less expensively upon the credit of Great Britain than upon that of Ireland, so that after the Union it was the natural inclination, apart from all reasons of necessity, to defray exceptional expenditure by borrowing, whereas before the Union the Irish Parliament had borrowed as little as possible, and only in the last resort. As a result of the complete exhaustion of Ireland during the war, the
p.374power of raising money on Irish credit nearly came to an end. By far the greater part of the Irish loan had to be raised in Great Britain, and in 1815 it was thought impossible to obtain in Ireland even £1,000,000l. by way of public loan.
The fact that Ireland was able to meet only a small part of her whole expenditure by taxation shows that her relative ability to contribute to Imperial expenditure did not increase in the same proportion as that of Great Britain, and that whether the proportion of twoseventeenths was fair or not at the time of the Union, as events turned out, it proved to be far too large during the succeeding years.
During these fifteen years subsequent to the Union the whole Irish revenue was raised by means of customs, excise, stamp duties, and non-tax revenue; there was no direct tax in the nature of income tax such as existed in Great Britain. The rise of revenue was due partly, and chiefly, to the augmentation of existing duties, but also to some increase in the consumption of dutiable commodities. In 1812 the total revenue raised in Ireland amounted to £5,696,841; of this a little over £1,000,000 was produced by stamps and non-tax revenue, and the whole balance was rased in nearly equal proportions by customs and excise.811 Between 1801 and 1812 the duty per gallon on home-made spirits in Ireland was gradually increased from 2s. 4 1/2d. to 5s. 1 1/4d. During the same period the rates of duty on brandy and rum were raised from 8s. 7 1/2d. and 6s. 8 3/4d. to 12s. 7 1/2d. and 10s. 3 1/2d. per gallon respectively. In 1801 superior teas had paid 35 per cent ad valorem, and cheap teas 20 per cent; but in 1812 the duty on all teas stood at 96 per cent. The malt duty was raised from 1s. 6 1/4d. to 2s. 6 3/4d., an additional duty of 2s. 8d. per cwt. was placed on sugar in 1801, and another additional duty of 3s. 6d. in 1806, while the duty on tobacco
p.375increased from 1s. to 3s. 2d. in the pound.812 Thus there was a large increase in Irish indirect taxation during this period, an increase which fell with crushing weight on the large numbers of poor. But the official values of exports and imports from Ireland during the same years show that trade had expanded, and that the Irish consumption of spirits, tobacco, tea, and sugar had slightly increased owing to growth of population, that of wine alone showing a diminution. This small increase of consumption helped forward the rise of the revenue.
The exemption of Ireland from the income tax was a boon to the Irish tax-payer at a time when the rate in Great Britain was 2s. in the pound on all incomes over £150. Ireland was also exempt from the land tax and the inhabited house tax; she was not required to pay excise duties charged in Great Britain on certain articles, such as beer, bricks, candles, calicoes, glass, hops, salt and soap; while other articles, such as spirits, tea, tobacco, wine, and foreign salt, paid lower rates in Ireland than in Great Britain. Except during the earlier years of this period, Ireland was always in arrears with her contribution, but no great pressure was brought to bear on her to make up these arrears, no interest was charged on them, and just before the amalgamation of the Exchequers in 1817 £2,000,000 was wiped off the Irish account. Great Britain treated Ireland with consideration in all matters of finance during the sixteen years subsequent to the Union. The financial arrangements which had been made by the Treaty of Union seem to have been carried out in a way that was as little oppressive as possible to Ireland, and we have Lord Plunket's testimony to the justice and impartiality with which Irish interests were safeguarded by the Imperial Parliament.813 By 1815 Englishmen realised that the war had affected the financial arrangements of the Union in such a way that the Irish revenue
p.376could only defray half of the Irish expenditure, while the consequent growth of the Irish debt had been out of all proportion to the resources or abilities of the country. The appalling financial condition to which Ireland was reduced was not at all due to the interpretation of the Act of Union: it was due to the actual financial arrangements of the Act. Even the close of the war, which brought such relief to the industrial population of Great Britain by the fall of prices, only seemed to increase the distress in Ireland. In that country no revival of trade followed the war; on the contrary, peace came as a calamity to the mass of the people, for the profits which they had made from the war prices for their provisions now came to an end. Something had to be done to relieve the country, and it was the fact that Ireland was on the verge of bankruptcy that led to the amalgamation of the Exchequers in 1817 and the abolition of the system of proportional contribution.
The Parliamentary Committee which sat in 1815 to enquire into the debt charges of Great Britain and Ireland devoted much of its report to the state of the Irish debt, and the question how far Parliament would be justified in consolidating the Exchequers according to the provision laid down in the seventh article of the Act of Union.814 The report stated the actual values of the Irish and British debts, and estimated that their proportions were about 2s. to 12 1/2d., or a larger proportion for Ireland than that of her contribution to Imperial expenditure. But the majority of the members of the committee held that Parliament would be interpreting the financial article of the Treaty of Union in its proper spirit if it abolished the systems of separate Exchequers and proportional contributions. They thought that on the whole it was expedient that the debts and expenditures of the two countries should be consolidated in order to
p.377relieve the existing burden on Ireland, and unanimously resolved that although many of the war taxes levied in Great Britain had not been extended to Ireland, yet the country had advanced in permanent taxation at a far more rapid rate than Great Britain. The committee concluded its report by recommending a financial as well as a legislative Union between the two countries, and it did this with the declared intention of relieving Ireland and rendering her resources more productive. Government was thus forced to take some decided action, and in the May of 1816 the Chancellor of the Exchequer moved in Parliament his resolutions for the consolidation of the British and Irish Exchequers.815 He emphasised the great efforts which Ireland had made to meet her proportion of contribution, and how signally she had failed in her attempt, and he pointed out that the condition of Ireland was such that the contemplated extension to that country of British taxes would only about make up the existing deficiency in the Irish revenue, and would certainly do nothing to relieve Great Britain. The resolutions which were moved included indiscriminate taxation between the two countries, subject, however, "to such particular exemptions and abatements in favour of Ireland [...] as circumstances may appear from time to time to demand." 816
The resolutions were agreed to, and a Bill was brought in for consolidating the debts and public revenues of the two kingdoms and became law in the following July. This Act 817 provided that all revenues in Great Britain and Ireland were, from and after January 5th, 1817, to constitute one general fund, called the "Consolidated Fund of the United Kingdom"; and that fund was to be charged with and indiscriminately applied to (1) the service of the British and Irish debts, (2) the civil list,
p.378(3) all other services previously charged on the separate consolidated funds of the two kingdoms, and (4) supply services of the United Kingdom generally.
The actual result of the consolidation of the Exchequers was to stop the impending bankruptcy of Ireland, and place her in a comparatively solvent position. At the time of the consolidation Ireland had to meet separate charges to the amount of £6,500,000, and she was liable to contribute to the joint expenditure of the United Kingdom £4,700,000. Her total liabilities were, therefore, £11,200,000, and as her revenue for the year was only £5,560,000, she had a deficit of £5,640,000.818 If the consolidation had not taken place, this deficit must have been met by additional borrowing; but under the new arrangements, although Ireland paid over her whole revenue to the Imperial Exchequer, she was from this time relieved from the necessity of piling up new liabilities on account of her annually recurring deficits. To put it in another way, under the Union arrangements the proportions of the respective contributions of Great Britain and Ireland to Imperial expenditure were 7s. 1/2d. to 1, but under the arrangement of 1817 Ireland simply paid over her whole revenue, which amounted to rather more than £5,500,000, while Great Britain became liable for the remaining £83,753,000 of Imperial expenditure. Thus the actual proportions under the new arrangements were fifteen for Great Britain to one for Ireland, or Ireland only paid half the amount that had been fixed by the Act of Union as her fair share. And it is important to notice that in spite of this tremendous decrease in Irish liabilities, Ireland continued as before to pay as much as she was able to raise, so that there was no relief from taxation. The country was saved from bankruptcy, but no relief could be given to individual taxpayers. Since the amalgamation of the British and Irish Exchequers, Great
p.379Britain has been content to take what she can get from Ireland, and has herself become responsible for the capital liabilities as well as the administrative expenses of her poorer partner. Ireland has never again been called upon to pay any fixed contribution to Imperial expenditure, but has simply paid a sum representing the difference between her own local expenditure and her total true revenue.
The pressing question in 1817 was the amalgamation of the Exchequers in order to save Ireland from bankruptcy. The unification of taxation was regarded as expedient, but for some years little was done in this way. But from this time we have to cease regarding Ireland as a separate country for fiscal purposes, for she becomes an integral part of the United Kingdom fiscally as well as legislatively, except for such exemptions and abatements from the general taxation as Parliament might allow her on account of her comparative poverty. Once the Exchequers were consolidated it was no longer necessary to levy customs and excise duties in the country where the dutiable article was consumed. Section 8 of article 6 of the Act of Union had provided that all duties charged on the importation of foreign or colonial goods into either country should, on their export to the other, be either drawn back or the amount, if any should be retained, placed to the credit of the country to which they were exported, so long as the expenditure of the United Kingdom was defrayed by Great Britain and Ireland by proportional contributions. But when, in 1817, the systems of separate Exchequers and proportional contributions disappeared, there was no reason why these fiscal regulations should be continued, and in 1826 new regulations were accordingly framed. All payment and repayment of duties in the cross-Channel trade were to cease, except in the case of articles subject to different rates of duty, and since the year 1826 accounts of the quantities of articles shipped from Great Britain to
p.380Ireland, and from Ireland to Great Britain, have not been kept. Another fiscal reform followed the amalgamation of the Exchequers. We have seen that after the Union certain duties had been retained both in Great Britain and Ireland with the view of protecting the manufactures of one country from the effects of natural or acquired advantages in the other. These duties had been fixed by the Act of Union at 10 per cent, to continue for the space of twenty years. They remained actually in force until 1820, but an Act of that year 819 only temporarily continued them and provided for their gradual reduction and their final extinction in 1840. This Act, however, was never carried out, and in 1824 all the 10 per cent duties were abolished.820
The Act which consolidated the Exchequers did not in itself provide for a unification of taxation between Great Britain and Ireland; but the resolutions of the Chancellor of the Exchequer passed by Parliament in 1816 had included such a unification, while article 7 of the Treaty of Union distinctly laid down that a system of indiscriminate taxation might be adopted on the amalgamation of the British and Irish debts if Parliament thought such a policy expedient. At no period indeed since 1817 has absolutely indiscriminate taxation existed, for even at the present day certain taxes paid in Great Britain do not extend to Ireland, and so the clause of Article 7 of the Treaty of Union providing for exemptions and abatements in favour of Ireland has never been altogether ignored. From 1817 to 1853 comparatively little was done in the way of raising Irish taxation to the level of British, because although British statesmen regarded complete fiscal Union as the ideal to be aimed at, they had a distinct grasp of what was possible and what was not possible in the matter of Irish taxation, and therefore realised the uselessness of raising it beyond a certain
p.381point. For varying periods after 1817 the stamp duties and the duties on various articles of consumption were lower in Ireland than in Great Britain, while the income tax, which was removed in Great Britain at the close of the war, was re-imposed in that country eleven years before its extension to Ireland. The rates of some duties were, however, assimilated at different dates between 1817 and 1853. In 1819 the tobacco duties in Ireland were raised to the same rates as those prevailing in Great Britain. This was a heavy addition to the taxation of the mass of the people, for the duty on unmanufactured tobacco was raised from 1s. to 3s. the pound, and that on manufactured tobacco and cigars from 1s. to 16s. In subsequent years these duties were raised still higher in accordance with the increase of the rates in Great Britain. The tea duties were levied at the same rates in both countries from 1817, but the stamp duties continued to be lower in Ireland for many years, and in this case assimilation did not take place till 1842.821 In 1817 the duties on home-made spirits in Ireland were not much more than half those levied on spirits in Great Britain.822 In the course of the next few years this difference increased, but in 1825 the reduction of the duties in England caused it to become less marked. The Chancellors of the Exchequer were afraid to raise the Irish spirit duties because of possible smuggling and illicit distillation; and although in 1842 Peel raised the rate by 1s. the gallon, he was forced to abandon this additional duty in the following year. From that time until 1853 the rates of the spirit duties in Ireland were only about one-third of those prevailing in England, for it was not until after 1853 that Gladstone commenced the policy of assimilating the rates of duty on home-made spirits in both countries.
Thus, with the exception of the heavy tobacco duties
p.382comparatively small additions were made to Irish taxation prior to 1853. On the other hand, it must be noticed that the great remissions of taxation which took place in Great Britain in 1824 and 1825, and again from 1839 onwards, applied to those taxes which either did not extend to Ireland at all, or which only affected or benefited her in a slight degree.823 The beer duty, which produced £3,000,000 in 1829, was repealed in 1830; the duty on printed cottons, which produced the same amount, was abolished in 1831, the duty on candles in 1832, that on starch in 1834, while in 1833 half of the soap duty was removed. These financial reforms were undertaken in the interests of British industry and did not affect Ireland. Nor did many of the subsequent fiscal reforms have any bearing on Irish taxation. In 1845, 450 items were taken off the British tariff, all duties on export were repealed, and also the British excise on glass, which had acted in favour of the Irish glass industry. In 1853 the remaining duty on soap was repealed, and in 1850 and 1862 the duties on bricks and hops were abolished. But the largest remissions of taxation in Great Britain were made on the importation of food stuffs. In 1846 most of the duties on foreign corn, on the importation of live animals and of most dead meats were abolished. The duties on butter and cheese were reduced in the same year and abolished finally in 1860, while the small remaining duty of 1s. a quarter on corn, grain, and flour was repealed in 1869. The repeal of these duties naturally affected Ireland, but it was not the boon which it was to the people of Great Britain, and could bring little relief from taxation to the inhabitants of an agricultural country. As regards all the other remissions of taxation, they applied nearly altogether to Great Britain alone. In consequence, in spite of the conciliatory policy adopted
p.383towards Ireland in this period from 1817 to 1853, we see only a very small decrease in the amount of taxation per head in that country side by side with a large fall in the amount of taxation per head in Great Britain. In 1820 British Imperial taxation stood at £3 10s. per head of the population; in 1850 it had decreased to £2 7s. 8d. In Ireland, on the other hand, Imperial taxation, which had stood at 14s. 5d. per head in 1820, had only fallen to 13s. 11d. in 1850, 824 so that, while taxation per head in Great Britain decreased by one-third, the diminution in Ireland was hardly noticeable.
The small benefit which Ireland reaped from the fiscal reforms of the first half of the nineteenth century was simply due to the economic conditions which prevailed in the country. But although the advantages which she gained from the new financial policy were insignificant compared to the advantages conferred on the people of Great Britain, taxation per head did decrease slightly in spite of the large additions to the tobacco duties, and this is particularly interesting because such a decrease of taxation does not occur again; on the contrary, as far as can be seen from rather inadequate figures, taxation per head in Ireland has risen steadily from 1853 to the present day. The period from 1817 to 1853 was, financially speaking, a favourable enough one for Ireland. Unfortunately, any benefit which might have been conferred on her was rendered impossible by the terrible potato famine of 184647, when two millions of the Irish people were swept away by death or emigration. Just as the country was thoroughly exhausted from the effects of the famine, the whole financial policy adopted towards Ireland changed, and Irish taxation began to be rapidly assimilated to British at a time when great prosperity had come to Great Britain and the reverse to Ireland. The repeal of the corn laws had stimulated the commercial prosperity
p.384of Britain; large cities were expanding, railways were developing, and the foreign trade of the country was increasing by leaps and bounds. But Ireland had just passed through the awful ordeal of the famine; her population had suddenly diminished by one-fourth, there had been a universal decline in Irish manufactures, the repeal of the British corn laws had begun the destruction of the Irish export trade in cereals, and the extension of the Poor Law system to Ireland had greatly increased the local rates. Just as the famine subsided the effects of free trade began to take effect. Naturally the Irish people imported the cheap inferior food and clothes which began to be thrust in upon them. Wheat-growing decayed; local industries were destroyed by the competition of large manufacturing towns in Great Britain; every class of Irish producer saw ruin staring him in the face, while landlords and farmers were further impoverished by the huge poor rates, which sometimes reached 20s. in the pound. The misery and poverty of the country could hardly have been greater, and to us at the present day it seems extraordinary that just at this inopportune time Government should have thought fit to go back from the conciliatory fiscal policy which had existed since 1817.
The new system was begun by Gladstone when Chancellor of the Exchequer. In his speech in 1853 recommending the extension of the income tax to Ireland,825 he said that in his opinion the time was come for Ireland to support this tax, and he argued that it could not hurt the country, as it would fall solely on the richer classes. The fact that it was these classes which were at present subject to poor rates far heavier in their burden than those prevailing in Great Britain was not mentioned, and it was this rather specious argument that induced Parliament to agree to the measure. As a set-off to the new imposition Gladstone wiped off the Irish debt, called the consolidated annuities, which had been incurred for poor
p.385relief during the famine. This relief was equivalent to about £240,000 a year, but the new income tax in Ireland yielded, even in the first year, £460,000. In 1842, when £5,500,000 had been imposed on Great Britain by the re-imposition of the income tax, a relief of £12,000,000 had been given by the removal of the corn duties and other taxes which had been burdensome to manufacturing industry. Compared with the compensation formerly given to Great Britain, the compensation given to Ireland for the imposition of the tax was small. The Irish consolidated annuities would have been paid off in a certain number of years, and the charges for them would therefore have ceased, while the income tax has entered into the system of permanent Irish taxation. At the same time the Irish famine debt really represented expenditure for Imperial purposes; it only applied to certain parts of Ireland, and so was no justification for the imposition of the income tax over the whole country, and finally the abandonment of the Irish liability to the debt was in any case only a matter of justice and humane policy. The additional yield from the income tax in Ireland 826 enabled Gladstone to carry out further reforms in the way of reducing taxes on necessaries and the materials for manufacture, reforms which, like the previous ones of Peel, were calculated to benefit the inhabitants of a manufacturing country but could have little effect on the people of agricultural Ireland.
The imposition of the income tax was not the only additional taxation laid on Ireland in 1853. In that year Gladstone began increasing the spirit duties in the country, with the view to eventually assimilating the Irish and British rates. The rate was first raised from 2s. 8d. to 3s. 4d. per gallon, and Gladstone denied that it was amongst the "rights of man" that the Irishman should be
p.386able to get intoxicated more cheaply than the Englishman.827 This additional rate yielded even more than had been estimated, and in the next year Gladstone imposed, without opposition, another additional 8d. in the gallon, thus bringing the Irish rate up to 4s. per gallon.828 This second increase of duty did not bring about any decrease of consumption, and in 1855 the rate was raised to 6s. 2d. per gallon.829 Three years later Disraeli increased the duty to 8s. per gallon, thus completely assimilating the Irish duty with the English and Scotch.830 There was little opposition to this policy, even from Ireland, and no serious attempt has ever been made to revert to the old system of differential treatment in the case of the spirit duties; the discussion has turned on the injustice of not taxing the alcohol in beer in the same proportion as the alcohol in spirits.
The greatest increase in the permanent taxation of Ireland took place between 1853 and 1860, an increase which the Financial Relations Commission of 189496 estimated at 2 1/4 millions per annum. Excluding non-tax revenue, the taxation per head in Ireland rose from 13s. 11d. In 184950 to £1 5s. 4d. in 185960, this rise being due to the simultaneous increase of taxation and decrease of population; while in Great Britain, although the Crimean War had added to the expenditure, taxation per head only increased from £2 7s. 8d. to £2 10s., and in 186970 sunk to £2 5s. 9d.831 Since 1860 the chief additions made to the payments of the Irish people have been in the region of local taxation, and owing to the great decline in population the revenue of Ireland has remained fairly stationary until the last two years, when a considerable increase has taken place owing to the imposition of additional taxation all
p.387over the United Kingdom. In 189394 the total net Irish revenue, excluding non-tax revenue, was £6,644,000, about the same amount as the annual tax revenue since 1865; but in 190102 it was £8,712,000, an increase of £2,068,000. This increase, however, was but small compared with the increase that took place in the British revenues during the same period. Taking the whole of the United Kingdom, the total tax revenue in the year 189394 was £82,439,000; in 190102 it was £130,000,000, an increase of £47,760,000.832 Thus the Irish increase was only 4.33 per cent of the total increase of the United Kingdom, or less than the 5 per cent which the Financial Relations Commission of 189496 stated was the taxable capacity of Ireland as compared with the taxable capacity of Great Britain. It therefore appears that the Irish contribution to the whole expenditure of the United Kingdom shows a smaller proportion at the present time than in 1896, when the Financial Commission completed its report. This is due partly to a decrease of population in Ireland, which keeps the revenue from rising further, side by side with a large increase of population in the United Kingdom, which forms a powerful factor in the rise of the British revenue, and partly to certain changes and additions in taxation, which have resulted in a heavier burden being placed on Great Britain and a lighter one on Ireland. For some years after 1893 the income tax produced less for each penny in Ireland than it did in the years before 1893, while in Great Britain every year showed a higher yield than the preceding year. The falling off of the yield per penny in the income tax in Ireland was partly owing to the purchase by tenants of estates which, when divided up among small holders, paid no income tax, but chiefly to the extension of the system of abatements and exemptions in the income tax, which naturally had a greater effect on the yield of a poor country like Ireland than on
p.388the yield in Great Britain. The recent tax on coal has added to the taxation of Great Britain, but does not touch Ireland; and last year in regard to the tax on corn the Chancellor of the Exchequer agreed to halve the new tax on maize, as the Irish members succeeded in convincing him of the great burden this duty would impose on the poorest classes in Ireland. But in spite of all this the last three years have added greatly to the financial burden of Ireland, for the increased taxation has been taken from a still declining population, among whom material improvement is at best very small. Increases in indirect taxation must always fall very heavily on the Irish poor, and the very poor form a large part of the population of Ireland.
The central point in Irish finance has been, and still is, the declining population of the country. It is the enormous increase in the population of Great Britain which has been one subsidiary cause of the great increase of the revenue of the United Kingdom. In Ireland the revenue showed no upward tendency between 1860 and 1896, for any increases of taxation that were made were counteracted by a decrease of the population from 5,821,000, to 4,571,000. This decrease has been chiefly owing to emigration, but also to a decreasing birth and marriage rate; and it has continued steadily since 1896, although rather less rapidly. This steady decline of the Irish population is, however, chiefly important in connection with local taxation, and is the main cause of the terrible pressure of the rates in the western and southern districts of Ireland.
One of the most interesting features of the financial relations between Great Britain and Ireland during the last three-quarters of the nineteenth century is the great increase which has taken place in the expenditure on Irish services relatively to the expenditure on British services. Excluding the expenses of collecting the taxes and managing the postal services, which may be regarded as properly Imperial, the increased charge of civil government
p.389in Ireland is still more marked. In 181920 the civil government charges in Great Britain, with a population of 13,765,000, were £1,113,000, or 1s. 7d. per head of the population; in Ireland, with a population of 6,802,000, they were £618,000, or 1s. 10d. per head. But in 189293 these charges in Great Britain, with a population of 33,469,000, were £19,103,000, or 11s.5d. per head; while in Ireland, with a population of 4,638,000, they amounted to £4,544,000, or 19s. 7d. per head.833 Since 1893 the expenditure on Irish services has continued to increase. In 189394 the cost of civil government and collection of revenue amounted to £5,603,000, but in 1901oz it had risen to £7,214,000, an increase of £1,611,000.834 In consequence less and less of the Irish revenue has been available for purposes other than Irish, and it is a surprising fact that in spite of the large increase which took place in the Irish revenue after 1853 the net contribution of Ireland to charges other than Irish was actually less in 1894 than in 1850.835 In 190102, notwithstanding the rise in the Irish revenue, only £605,000 more was contributed to purposes other than Irish than in 189394.
The reasons for this huge expenditure on Irish services lies in the political and social condition of Ireland and the fact that the government is really not conducted on a peace footing. A large number of soldiers is always kept in the countrytheir cost is reckoned as "Irish services"while the Royal Irish Constabulary is in reality a standing army and the most expensive police force in the world. Mr. Lough estimates that in 1895 the cost of the Irish constabulary was 6s. 7d. per head of the Irish population, and that there was one policeman for every 257 people. In
p.390Scotland, on the other hand, there was in the same year about one policeman for every 1,000 persons, and the cost of the police force was only 2s. 3d. per head of the Scotch population.836 Since 1895, however, the cost of the Irish constabulary does not appear to have increased, but the diminution of population has resulted in a slightly higher cost per head of the inhabitants of Ireland. The cost of the Irish Civil Service is also very high; the Local Government Board, the Board of Works, the Superior Court, Prisons and Law Charges, all cost a great deal considering the resources and population of the country. But the increase in the expenditure on Irish services which has taken place within the last few years has not been due to the growing cost of government. A large additional sum of money, over one-and-a-half millions, has been expended in the first place in increased grants for the purposes of the Local Government Board in connection with the establishment of local government in Ireland; it has also been spent in further grants for education, but it has chiefly been expended in additional grants to local authorities, which in 190102 amounted to £1,021,000, as compared with £569,000 in 189394. The grant for agricultural rates in Ireland and the establishment of the Board of Agriculture and Technical Instruction cost a large sum of money, and all this increased expenditure has been to the direct benefit of Ireland, and as such must be regarded as a set-off to actual taxation. The financial situation of Ireland has changed for the better during the last few years, because Government realises more than formerly that the peculiar economic condition of the country entitles the Irish people to peculiar consideration in matters of finance.
The great revolution in fiscal policy, already touched upon, which was commenced by Huskisson in 1824 and carried on to a far greater extent during a long period of
p.391thirty years, beginning with the accession of Sir Robert Peel to office in 1841, has naturally produced different effects in the two countries of Great Britain and Ireland. During the first part of the nineteenth century the greatest burden on the industry of Great Britain arose from the operation of the Corn Laws. The laws were certainly a great grievance to the working classes, and they acted as a check on commercial expansion. At the same time they no longer succeeded, as before, in keeping up a sufficient food supply for the whole population, the real motive of the originators of the system, and so were completely condemned. The repeal of the Corn Laws in 1846 was a tremendous boon to the manufacturing population of Great Britain, for from that time they have been able to obtain a cheap and plentiful food supply. Other financial reforms have also benefited them greatly, and have freed British industry and commerce from everything that could possibly hamper them. The general effect of this new financial policy was to abolish the excise and custom duties upon the raw materials of manufacturing industry and upon food stuffs. The whole change effected during this period was from a fiscal system, in which revenue was derived from a great number of excise and custom duties, pressing heavily and at many points upon the chief imported articles of consumption, and upon raw materials for manufacture, to one in which revenue is derived partly from direct taxation and partly from heavy excise and custom duties on a very small number of imported articles of general consumption and on home-made alcoholic drinks. It is undeniable that this change in fiscal policy has been extremely advantageous to the people of Great Britain, because the great majority of the British population depend, not upon agriculture, but upon industry and commerce. But in Ireland the matter is otherwise. The mass of the Irish people are dependent on agriculture, and have been dependent upon it all through the century. As consumers they may have slightly gained by the abolition
p.392of the duties on food stuffs, but as producers, nearly altogether dependent upon agriculture, they have lost in a far greater degree. The untaxed supply of foreign corn, live stock, meat, dairy produce, and other food stuffs led to cheap prices in the British markets, and severe foreign competition caused a decline in Irish agriculture. After the complete introduction of free trade policy by the repeal of the Corn Laws the taxation of Ireland was largely increased by the imposition of the income tax and the enhancement of the spirit duties, changes effected partly to facilitate remissions of taxation in Great Britain and to abolish hindrances to manufacturing industries in which the Irish people had little share.
At the present day Ireland is quite able to support her own population from the corn and meat she produces and at the same time to export a considerable surplus. On the other hand, the Irish population consumes, in proportion to its wealth, a large amount of tea, tobacco, and spirits, and a small amount of beer. Looking at the matter dispassionately, it must be acknowledged that our present fiscal system, which raises practically no revenue from foreign food stuffs,837 but does raise a very large revenue from spirits, tea and tobacco, is hardly advantageous to the people of Ireland, however beneficial it may be to the inhabitants of England. In the eighteenth century Ireland suffered from the protective policy of England; in the nineteenth she has suffered from the free trade policy of the United Kingdom. The fiscal situation of Ireland is the inevitable result of the contrast in economic conditions between herself and Great Britain. In matters of taxation, as well as in other matters, the interests of the greatest number have to be consulted, and in the United Kingdom the greatest number belong to the urban and manufacturing classes.
It would probably be impossible to devise a system of taxation which would be equally beneficial to the inhabitants of urban and rural districts, but there are signs of a growing idea that the inequality of advantage to Ireland arising from a different incidence of taxation to that which takes place in Great Britain does entitle her to special consideration in fiscal matters. A system of taxation which has been devised in the interests of a manufacturing country cannot be suited to the inhabitants of a poor agricultural country, where economic conditions and habits of living are in many ways so different. The phenomena which we see in the present financial relations of Great Britain and Ireland must be seen in the fiscal relations of any two countries or districts, one manufacturing and the other agricultural, subject to the same financial system. For example, Prussia is at present confronted with the difficult problem of giving equal benefits in her customs system to the inhabitants of her manufacturing and agricultural districts, while in Austria-Hungary harmony is only maintained by the method of compromise; thus Austria allows the free importation of Hungarian food stuffs, and Hungary in return permits Austrian manufactures to be imported duty free while both the manufactures and food stuffs of foreign countries are taxed on importation into all parts of the empire. But nothing exactly analogous to the financial relations between Great Britain and Ireland can be found in the fiscal relations of two practically independent countries like Austria and Hungary, or even in a federal State like the United States of America, where only common expenses are defrayed out of the central Treasury. Nor can an exact analogy be found in the financial relations of the different districts of a unitary State like Prussia, although a consideration of Prussia's present tariff difficulties shows that the financial phenomena existing in Ireland are by no means so unique as is sometimes supposed.